ACIT, Aurangabad V. The Jalna Peoples Co-Op Bank Ltd, Jalna

ITA 1499/PUN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8498 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 25-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS.1498 & 1499/PN/2013 (A.YS: 2009-10 & 2010-11) ACIT, CIRCLE 1, AURANGABAD APPELLANT VS. THE JALNA PEOPLES CO-OP. BANK LTD., SHOLA CHOWK, SADAR BAZAR, JALNA 431203 PAN: AAAAJ0638E RESPONDENT APPELLANT BY : SHRI RAJESH DAMOR RESPONDENT BY : SHRI S.N. PURANIK DATE OF HEARING: 13.08.2014 DATE OF ORDER : 20.08.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: BOTH THE APPEALS HAVE BEEN FILED BY THE REVENUE AG AINST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEAL), AURA NGABAD FOR DIFFERENT ASSESSMENT YEARS 2009-10 AND 2010-11 ON T HE FOLLOWING SIMILAR GROUNDS. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS CORRECT IN DECIDING THAT ASSESSEE CAN OFF ER INTEREST RECEIVED FROM BAD AND DOUBTFUL DEBTS (NPA) ON ACTUAL RECEIPT BASIS AS PER RBI GUIDELINES EVEN THO UGH ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNT. IN SPITE OF THAT, PROVISION OF SECTION 43D IS NOT APPL ICABLE TO THE ASSESSEE. 2. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT (A) BE VACATED. 3. THE APPELLANT CRAVES LEAVE TO ADDITION, AMEND OR AL TER ANY GROUNDS OF APPEAL. 2 ITA NOS.1498 & 1499 OF 13 JALNA PEOPLES CO-OP. BANK LTD 2. THE ASSESSEE IS A COOPERATIVE BANK CARRYING ON T HE BUSINESS OF BANKING PURSUANT TO THE BANKING REGULAT ION ACT, 1949. IT HAS FILED RETURN OF INCOME DECLARING TAXA BLE INCOME AT RS.NIL. THE ASSESSMENT HAS BEEN COMPLETED BY THE A SST. COMMISSIONER OF INCOME TAX, CIRCLE-1, AURANGABAD U/ S.143(3) R.W.S. 147 OF THE ACT ON 04.02.2013. THE ASSESSING OFFICER HAS MADE ADDITIONS OF RS.3,97,88,747/- ON ACCOUNT OF DI SALLOWANCE OF EXCESS CLAIM OF VRS OF RS.3,11,747/- AND INTERES T ACCRUED ON NPA RS.3,94,77,000/-. 2.1 IN APPEAL, THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE ON THE POINT OF INTEREST ON NPA BY OBSERVING AS UND ER: 8. IN VIEW OF THE ABOVE FACTS AND DISCUSSION, CIRC ULARS ISSUED BY RBI AND CBDT, THE RATIO LAID DOWN BY THE VARIOUS DECISIONS RELIED ON BY THE APPELLANT AND ALSO THE D ECISIONS REFERRED TO IN EARLIER PARA, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN MAKING ADDITION ON ACC OUNT OF INTEREST ACCRUED ON NPA. THE A.O. IS DIRECTED TO D ELETE THE ADDITION. THE A.O. IS ALSO DIRECTED TO OBTAIN THE FOLLOWING DETAILS FROM THE A.O. (A) THE DETAILS OF NPA ACCOUNTS WITH NPA STATEMENTS OF BANKS SUBMITTED TO RBI. (B) THE DETAIL OF INTEREST ACCRUED DURING THE YEAR ON NPA ACCOUNTS. (C) THE DETAIL OF INTEREST ACTUALLY RECEIVED DURING THE YEAR ON NPA ACCOUNTS. (D) THE DETAIL OF INTEREST RECEIVED OR ACCRUED DURING THE YEAR ON NPA ACCOUNTS AND CREDITED TO PROFIT AND LOSS ACCOUNT. (E) THE DETAIL OF INTEREST RECEIVED OR ACCRUED DURING THE YEAR AND DEBITED TO PROFIT AND LOSS ACCOUNT ON ACCOUNT OF PROVISION FOR OVERDUE INTEREST RESERVE OR INTEREST ON NPA ACCOUNTS. AND THEN THE FOLLOWING INTEREST, IF ANY, ON NPA SHO ULD BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE 3 ITA NOS.1498 & 1499 OF 13 JALNA PEOPLES CO-OP. BANK LTD (A) INTEREST ON NPA ACCOUNTS ACTUALLY RECEIVED DURING THE YEAR. (B) INTEREST ACTUALLY RECEIVED OR ACCRUED ON NPA ACCOUNTS AND FIRST CREDITED AND THEN DEBITED TO PRO FIT AND LOSS ACCOUNT ON ACCOUNT OF PROVISION FOR OVERDU E INTEREST RESERVE OR INTEREST ON NPA ACCOUNTS. GROUND NOS.L TO 4 ARE ALLOWED ACCORDINGLY. 9. IN THE RESULT, THE APPEAL IS ALLOWED WITH THE AB OVE DIRECTIONS. 2.2 WE FIND THAT ITAT, PUNE IN ASSESSEES OWN CASE FOR A.Y. 2008-09 HAD DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE MATERIAL, WE FIND THAT THE GROUNDS THE REVENUE ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT CIR. 3, NANDED VS. OSMANABAD JANTA SAHAKARI BANK LTD. LATUR IN ITA NO. 795/PN/2011 FOR A.Y. 2007-08 DATED 31-8-201 2 WHEREIN THE ISSUE HAS BEEN DECIDED BY OBSERVING AS UNDER: IN THE CASE BEFORE US, ADMITTEDLY, ASSESSEE HAS DIRECTLY TAKEN THE INTEREST TO THE BALANCE SHEET AN D IT IS NOT ROUTED THROUGH THE P & L A/C. MOREOVER, THE ISSUE OF THE TAXABILITY OF THE INTEREST ON THE STIC KY LOSSES/ADVANCES, IS COVERED IN FAVOUR OF THE ASSESS EE BY THE DECISION OF THE CO-ORDINATE BENCHES IN THE C ASE OF DY. CIT VS. THE DURGA CO-OPERATIVE URBAN BANK LTD., VIJAYAWADA IN ITA NO. 511/VIZAG/2010 DATED 10 - 3-2011 AND KARNAVATI CO-OP. BANK LTD., VS. DY. CIT (134 ITD 486 (AHMEDABAD). WE FIND NO REASON TO INTERFERE WITH THE REASONED ORDER OF THE LD. CIT(A) AND ACCORDINGLY THE SAME IS CONFIRMED. IN THE RESULT, T HE REVENUES GROUND IS DISMISSED. 4. SINCE THE FACTS OF THE PRESENT CASE ARE ON AN ID ENTICAL FOOTING, FOLLOWING THE AFORESAID DECISION OF THE TR IBUNAL IN THE CASE OF OSMANABAD JANTA SAH. BANK LTD. (SUPRA), THE GROUNDS RAISED BY THE REVENUE ARE DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 2.3 NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLE DGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR, SO FOL LOWING THE SAME 4 ITA NOS.1498 & 1499 OF 13 JALNA PEOPLES CO-OP. BANK LTD REASONING WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING OF CIT(A) WHO HAS HELD THAT THE ASSESSEE CAN OFFER INT EREST RECEIVED FROM BAD AND DOUBTFUL DEBTS (NPA) ON ACTUAL RECEIPT BASIS AS PER RBI GUIDELINES EVEN THOUGH ASSESSEE IS FOLLOWING ME RCANTILE SYSTEM OF ACCOUNT. AS A RESULT, THE APPEAL FILED B Y THE REVENUE IS DISMISSED. 2.4 A SIMILAR ISSUE AROSE IN ITA NO.1499/PN/2013 FO R A.Y. 2010-11. FACTS BEING SIMILAR, SO FOLLOWING THE SAM E REASONING, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING O F CIT(A) WHO HAS HELD THAT THE ASSESSEE CAN OFFER INTEREST RECEIVED FROM BAD AND DOUBTFUL DEBTS (NPA) ON ACTUAL RECEIPT BASIS AS PER RBI GUIDELINES EVEN THOUGH ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNT. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DIS MISSED. 3. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 20 TH DAY OF AUGUST, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 20 TH AUGUST, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A), AURANGABAD 4) THE CIT, AURANGABAD 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE